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UBS Investment Research
Prestige Estates Projects
M uted Q4 but expect strong FY12
Event: FY11 earnings miss UBSe; Healthy rental income a silver lining
Consol. Q4 & FY11 Net Income of Rs 333mn & 1,667mn (+29% YoY) was below
UBSe respectively impacted by higher interest costs and construction costs in Q4.
FY11 EBITDA grew to Rs 3.7bn, largely inline. FY11 Revenues grew strongly
driven by higher rental income (additional ~1 msf leased). Pre-sales was relatively
healthy (FY11 at 1.9 msf). Consol. Net D/E was 0.49x; Net debt at Rs 11.5bn.
Impact: Reduce FY11E/12E/13E estimates factoring higher operating costs
We lower our FY11E/12E/13E by 20%/15%/9% respectively to factor higher
interest costs and operating expenses. However, we expect a growing rental
annuity, healthy pre-sales and an execution pickup to drive earnings growth.
Action: Maintain Buy with growing rental annuity and launch visibility
We maintain our Buy rating as we expect 1) Encouraging pre-sales in upcoming
pipeline of 15 msf over next 12 months; 2) Healthy 19% CAGR in rental income
over FY11-13E; 3) Strong execution momentum for ongoing projects (47% of
NAV) as near-term share price drivers. Key risks are 1) relatively high exposure to
luxury housing (amid rising rates); 2) oversupply in pockets of Bangalore.
Valuation: Attractive at 49% discount to NAV
We find the stock attractive at 49% discount to our base-case NAV/share of Rs 275
and 27% discount to our bear-case NAV/share of Rs 194. We view the stock’s
underperformance as a good buying opportunity and maintain Prestige among our
top mid cap picks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Prestige Estates Projects
M uted Q4 but expect strong FY12
Event: FY11 earnings miss UBSe; Healthy rental income a silver lining
Consol. Q4 & FY11 Net Income of Rs 333mn & 1,667mn (+29% YoY) was below
UBSe respectively impacted by higher interest costs and construction costs in Q4.
FY11 EBITDA grew to Rs 3.7bn, largely inline. FY11 Revenues grew strongly
driven by higher rental income (additional ~1 msf leased). Pre-sales was relatively
healthy (FY11 at 1.9 msf). Consol. Net D/E was 0.49x; Net debt at Rs 11.5bn.
Impact: Reduce FY11E/12E/13E estimates factoring higher operating costs
We lower our FY11E/12E/13E by 20%/15%/9% respectively to factor higher
interest costs and operating expenses. However, we expect a growing rental
annuity, healthy pre-sales and an execution pickup to drive earnings growth.
Action: Maintain Buy with growing rental annuity and launch visibility
We maintain our Buy rating as we expect 1) Encouraging pre-sales in upcoming
pipeline of 15 msf over next 12 months; 2) Healthy 19% CAGR in rental income
over FY11-13E; 3) Strong execution momentum for ongoing projects (47% of
NAV) as near-term share price drivers. Key risks are 1) relatively high exposure to
luxury housing (amid rising rates); 2) oversupply in pockets of Bangalore.
Valuation: Attractive at 49% discount to NAV
We find the stock attractive at 49% discount to our base-case NAV/share of Rs 275
and 27% discount to our bear-case NAV/share of Rs 194. We view the stock’s
underperformance as a good buying opportunity and maintain Prestige among our
top mid cap picks.
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